Piracy and Brand Awareness - How the “Enforcement Directive”* has been implemented in Italy

“Piracy” has been a plague for dealers since the XIII century when, under the infamous “Jolly Roger” flag, the pirates’ ships appeared on the main maritime trade routes.

Nowadays piracy is not just robbery committed at sea, but also, as article 144 of the Italian Intellectual Property Code (hereinafter: IPC) states, “an act of piracy shall be considered to be the infringement and violation of industrial property rights belonging to others, committed by means of fraud and in a systematic manner”. Indeed, up to the end of the XVIII century the Society, through its Judges, felt the necessity to value and consequently to grant a protection also to intellectual works. Since then, this protection has been guaranteed through international agreements and national and international laws which safeguard copyrights, patents, industrial design rights, trade secrets and trademarks.

In the context of this article, we are going to analyse the concept of piracy related to IP rights and, in particular, how the EC “Enforcement Directive” (hereinafter: Directive) has been implemented into the Italian legal order through the Legislative Decree dated 16 March 2006, no. 140 (hereinafter: Decree).

The EC Directive aims at enforcing the protection of IP rights without limiting the “highest” value of competition. Its first recital, in fact, reminds that “eliminating restrictions on freedom and distortion to competition” is essential and then it maintains that “the protection of Intellectual Property is important … for promoting innovation and creativity”.

Among the goals of the Directive there is the implementation of the provisions contained in the World Trade Organisation Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs Agreement) to which all Member States, as well as the Community itself as regards matters within its competence, are bound.

Furthermore, an important objective of the Directive, as stated in recital no. 10, “is to approximate legislative systems” of the Community Member States, so as to ensure an “equivalent and homogeneous level of protection in the Internal Market”.

Promotion of innovation, defence of competition, implementation of provisions contained in the TRIPs Agreement and approximation of the Member States’ legal systems constitute the main grounds on which the Directive is based and which inspire and lead the innovations introduced by the Directive (innovations such as the role of evidences, the right of information, provisional and precautionary measures, alternative measures, the publication of judicial decision and criminal sanctions).

The Directive tries to introduce in the European legal system[1] more efficient instruments in order to prevent all infringements of IPr all infringement to the intellectual property rights.

One of the most relevant changes proposed by the Directive is the discipline concerning evidences and their preserving. Article 6 offers to the claimants the possibility to collect evidences, in the case in which they have presented reasonably available evidence to support their claims, with the contribution of the competent judiciary authority that may order that such evidence be presented by the opposing party. This chance is moreover granted, under the provision contained in the second paragraph (which refers to violations of IPr committed by acts of piracy) of the same article, in relation to financial and commercial documents and to the data related to bank accounts.

Protection of the collected evidences is then granted by the next article 7 through specific means such as the detailed description, the taking of samples and the seizure of products or materials. In case of emergency is also provided that such measures can be taken even without the other party having been heard. Of course, the European Legislative did not forget to accompany with these measures a range of rights and safeguard instruments for the counterparts.

Article 8 then presents the right of information. Such innovation wants to confer claimants, in presence of justified and proportionate requests, the chance to ask and obtain, through the intervention of the competent judicial authorities, a wide range of information concerning the infringements from several subjects related to the infringing activity carried out by acts of piracy.

Such discipline concerning evidences and the right of information has been translated into the Italian copyright law through the introduction of two new articles and in the Italianc IPC through the modification of its article 121 and the addition of a new article 121 bis. These two provisions now refer not only to evidences and the related questions but expressly refer even to piracy.

Before the Directive, article 121 of the IPC already prescribed the possibility for the judges to order the disclosure of documents or the communication of information also in order to identify the subjects involved in the production or distribution of the infringing products. The really innovative provision is the one related to the right to accede to financial, commercial and banking documents. However it seems that this stronger means of evidence may be used only in case of infringements committed systematically and on a commercial scale by acts of piracy under article 144 of the IPC.

A further relevant enforcement, conferred by the Directive through the implementation both in the Italian copyright law and in the IPC, consists in the criminal sanctions provided in case of refuse of providing information or in case of providing false information concerning the infringement.

Notable importance has been addressed by the Directive also to provisional and precautionary measures. The Directive provides, according to the TRIPs provisions, that the judicial authorities may impose precautionary measures immediately effective in order to avoid imminent infringement of IP rights. Such measures “are revoked or otherwise cease to have effect, upon request of the defendant, if the applicant does not institute, within a reasonable period, proceeding leading to a decision on the merits of the case…”. This possibility has been received by the Italian Decree modifying both the copyright law and the IPC which provide the possible stabilization of the effects of certain precautionary measures even if a judicial proceeding on the merit if not fed up by either parties. This provision refers only to the precautionary measures which have the effect to anticipate the protection usually ensured by an ordinary proceeding on the merit. Such exception is contained in the new paragraph no. 1 quater of article 131 ICP so as modified by the Italian Decree.

Moreover, a particular precautionary measure expressly provided for the cases of infringements committed systematically and on a commercial scale has been added in the IPC through the introduction of article 144 bis which provide the possibility of a precautionary seizure. This means a strong enforcement of IP rights against piracy.

The structure of the Directive introduces a sort of division between the provisional measures on one hand and the measures consequent to a proceeding on the merit on the other hand.

This second type of measures, implemented as well as the provisional ones in the Italian legal system, can be then subdivided in corrective measures, injunctions and alternative measures. The corrective measures provided under article 10 admit the chance to “physically” remove the infringement through the destruction, the recall or the definitive removal from the market. Particularly the figure of the recall of the infringing products is something new for article 124 of the IPC that before the modification introduced in order to implement the Directive, provided only the remedies of injunction and destruction.

With the provision of alternative measures, that have to be considered as one of the most significant innovation introduced by the Directive, the European Legislative proposes to Member States to introduce in their legal system the chance to impose to the infringers pecuniary compensation to be paid to the injured party instead of applying the “ordinary” measures.

The alternative measure of paying a pecuniary compensation is deeply linked to a liability rule. This means that the infringer, simply by paying a sum of money, can maintain the infringing products, the means used for the infringement and even the profits.

Actually, up to now this kind of measures have not been implemented by the Italian Legislative.

Another paradigm, less popular in the Italian system until the implementation of the Enforcement Directive is the recovery of profits. This figure is introduced by article 9 paragraph 2 of the Directive and is then implemented in the Italian legal order under article 125 paragraph 3. The Directive provides that in the case “the infringer did not knowingly engage in infringing activity, the judicial authority may order the recovery of profits”. Article 125 of the Italian IPC, after the implementation, introduce the paradigm of the profits’ recovery and according to some views extends this chance to all the cases in which the claimant require it.

This provision is placed in article 125 which discipline the compensation for damages. Indeed, after the implementation of the Directive, article 125 IPC provides that in assessing damages, the judicial authorities have to take into account not only the lost profits of the claimant but also the profits unfair made by the infringer and the moral prejudice caused to the rightholder.

Indeed, following the Directive implementation and thanks to the modification of article 121 IPC and to the introduction of articles 121 bis and 144 bis IPC it is now possible in Italy to obtain a more effective and rapid protection in case of piracy. Moreover, the modification to the discipline introduced through the implementation of the Directive should allow a better general running of the whole system.

Published by BNA International in IP and Technology Special Reports 2007

*Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004

[1] That has to be considered as the legal systems of all the Community Member States